Prepare for the IPO journey

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With strong momentum in India’s primary market, there is considerable interest from companies across industries looking to raise capital in the near future.

The amount of money raised in IPOs this year in 2021 has crossed $ 8.8 billion, exceeding the total amount raised over the previous three years. As the wave of IPOs continues in India, experts believe organizations need to carefully consider their IPO readiness, processes, systems, and overall readiness to operate as a public company.

In this context, The Economic Times & SS&C Intralinks organized a virtual discussion titled- “Going Public – A Plan for a Successful IPO”, which brought together key representatives from various sectors.

SS&C Intralinks is a leading provider of financial technology to the global trading, alternative investment and capital markets communities.

Preparation for IPO

The IPO journey can be broken down into three phases which are preparation, execution and the listing phase.

Veenit Surana, Partner, Ernst & Young Associates LLP advised that the first question companies should ask themselves is whether an IPO is the right decision or whether alternative sources of funding can be tapped. “The company should be ready with a three-year track record and have the financial documentation in place,” he said.

The other things the company needs to take care of are ensuring that the corporate elements are in place, appointing independent directors, gathering legal diligence to put in place the right entity structure, capital and corporate structure. tax implications due to this. The whole process can take around 5-6 months.

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Legal things that should be kept in mind

The expectation of the market regulator when companies submit their draft document is that of completeness.

Yash J. Ashar, Partner, Head-Capital Markets, Cyril Amarchand Mangaldas informed that India is probably the only market in the world where the first deposit with SEBI is a public deposit. “All of your documents are reviewed as a whole, so all of your legal and governance issues need to be addressed,” he explained.

The regulator is also investigating how the company’s capital is constituted from the start of the business until the time when the company submits its registration file.

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Need to be ready in terms of compliance

The boom in the IPO market has also heightened the aspirations of many companies in Tier II and III cities to monetize their past efforts, but they must be prepared to deal with compliance issues.

Abhijit Tare, Managing Director and CEO, Motilal Oswal Investment Advisors Ltd explains that going the IPO route is like going through a makeover. “The cost of compliance increases because the entire legal framework must be in place. All of these things need to be fixed, ”he said.

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Emerging market opportunities

The liquidity of the market has led to the constant need of fund managers and investors to come up with new ideas and better products.

Satyen Shah, Managing Director and Head, Investment Banking, Edelweiss Financial Services informed that many new age companies were not active in Indian markets and were not aware of the type of opportunities it had to offer them.

“It was always perceived that the Indian markets would be mature enough to properly assess companies that were not yet making a profit, but we have had some successes that we have seen in the market recently,” he said. .

This article was written by Amit Shanbaug of The Times Group.

Disclaimer: Content produced by Intralinks.Inc


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